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You are here: Home / Uncategorized / Why Do Homeowner Association Dues Cost So Much?

Why Do Homeowner Association Dues Cost So Much?

February 24, 2021 by Connie Yoshimura Leave a Comment

Well, the simple answer is they don’t, not really.  HOA dues can be divided into two basic groups.  The first group is what you would normally pay if you owned a single family home without an HOA.  Every homeowner pays for water, sewer, garbage, building insurance, snow plowing and landscaping.  Snow plowing, landscaping  and exterior maintenance may be items that are deferred or provided by the property owner.  In a full service HOA these costs are part of HOA dues.  Reserves are also established for maintenance items such as roofs, driveways, and exterior painting.  Basically, these are costs every homeowner will incur whether today or tomorrow.  However, if you are part of an HOA, you will be part of a non-profit limited liability company that has administration, accounting, and additional insurance requirements.  It will have a board of directors elected by the homeowners, and those board members must also be insured against liability and theft.   Most HOAs are also managed by a property manager with a monthly fee per unit.  Those fees can range from $15 to $30 per month per unit depending on the contract.  The benefit of professional property management is that there is a third party acting as an enforcer of the covenants, codes, and restrictions. 

The Municipality of Anchorage does not have the resources to moderate disputes between neighbors or violations of the CCRs unless the matter is of a health and safety concern.  So, the only recourse for the

violation of the CCRS is if a neighbor goes to Superior Court.  And that is expensive and very time consuming.  Most neighbors would rather put up with the violation than sue their neighbor.  The major purpose of the property management company is, therefore, to act as a mediator for neighborhood disputes.  In the early 1980’s when the MOA had a zero lot line ordinance, there were attached dwelling units without an HOA.  So, despite CCRS there was no opportunity for enforcement.  Today, you can see zero lot line homes where one side has a new roof and their attached neighbor does not.  You can see one side painted blue and the attached side painted yellow.  Ultimately, this failure of enforcement diminishes the value of a neighborhood.  In my opinion, even single family home communities should have an HOA to protect the community values by making sure the architectural requirements are obeyed.  Communities that are well managed tend to better hold their value, even during non-appreciating markets.

However, not all HOAs are the same  and dues can vary based upon what is included.  For example, water and sewer systems  may be private, even though they have been built to MOA standards.  In that case, there must be reserves established for the replacement of the water and sewer systems.  For public water and sewer systems that cost becomes the responsibility of AWWU.   Private roads, driveways, utility systems will increase the monthly dues because reserves must be established for their replacement.  Buyers need to carefully read the public offering statement for a new condo or a resale certificate for a single-family sale in an existing subdivision that is part of an HOA.

Here is a sample of what a typical HOA budget may look like. 

 

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Connie Yoshimura

Connie Yoshimura, Owner/Broker of Berkshire Hathaway HomeServices Alaska Realty, has over 30 years of residential real estate experience. She was the number one individual realtor, according to Multiple Listing Service, in 2015,2016, 2017.
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